Stocks may be at record highs, but growing concerns about rising interest rates, inflation and the Federal Reserve’s next move are keeping investors on their toes.
This is what experts are watching in the run-up to the Fed’s decision on Wednesday.
Jim Cramer, host of CNBC’s “Mad Money,” says it is still a market in which to invest.
“The money comes here. And I just think when I hear that I know there are going to be people who say, ‘Wait a minute, that’s a bad sign’ or they want to think on the other side of the business. But I listened to Scott Kirby from United this morning I listened to these upgrades from the cruise lines and how they could increase rates, and I come back and say, “You know what? It’s a good time to invest, sorry! “”
Karen Firestone, Chairman and CEO of Aureus Asset Management, ends the market decoupling.
“The market generally has a lot of expensive stocks, and we’ve seen what happened to the group – that’s Peloton, Zoom, Airbnb, DoorDash, Palantir. Those stocks have been falling since the fall because they were just ahead of the curve, great. companies but sell at high multiples of sales. So now we have the reopening of the trade since September. And of course airlines, hotels and casinos are going to experience great growth compared to what they had all Covid year. However, that doesn’t mean that Stocks keep going up forever You hear so many people talking about their enthusiasm for cyclical or value trading, but most sectors of the market are trading about 23 or 24 times ahead. were depressed, that’s 24 times the income So, Cat[erpillar] and Deere are selling at the same number as Facebook and Google, and the tech stocks are selling at 25 times earnings next year, and they clearly have some expensive names in them. So, you know, you can take a bit of a break from the cyclical that we’ve actually seen with technology. Technology stocks peaked in early September, and they went into this break a little bit and they are still down, the big names are down from where they were in the fourth quarter. They had a tough fourth quarter. They have had a very difficult year so far. They are up about 2% and cyclical stocks are up anywhere from 8% to 20%. “
Judy Shelton, author and economist, shares what the Fed can and cannot do to keep inflation in check.
“The reason people fear inflation now is that they see very rationally that a tremendous amount of liquidity has been injected into the system. And we’ve all learned that too much money chasing too few goods can cause inflation. Phillips Curve tradeoff is to believe that if we get ahead of inflation, we have the means to fight that, the means to fight that is to increase the interest rates paid on the reserves or to keep buying even more, to have more interaction in the credit markets, which is why I don’t think the Fed will start selling anytime soon I’m concerned if they say they can raise interest rates on excess reserves, which are already at an all-time high of $ 3. 6 trillion, that they promote this tendency for banks to be more interested in interacting with the Federal Reserve than in private loans, and the way you get productive economic growth, the kind that d Actually increasing output of goods and services is to encourage small businesses, that’s where the jobs are. So I worry that the Fed is in a bit of an unsustainable position because they think that by expressing a new tolerance for inflation they are somehow helping the lower-wage workers when in fact they are the ones who are hurt the most. due to inflation. And I think they discourage private lending, which would be the banks would stop building up reserves with the Fed and lend them to the real economy, you would get real growth, the kind that increases wages without inflation. cause. “
Thomas Farley, chairman and CEO of Far Peak, warns against valuations and unrealistic projections.
“What I’m worried about is investors getting hurt. And there are some deals I’m looking at and I’m just saying that this valuation is completely unrelated to financial reality … SPACS post deal that they have five-year projections of. a pre-earnings company and the market is somehow valuing it on earnings 2024-2025 that may or may not materialize.And my concern is that people will adopt that enthusiasm and end up getting hurt if the stock gets too far off. “That’s my only concern about SPACS is exactly that kind of situation, basically just selling a stock based on hope and conviction. I’d like to see sponsors feel a bit more tied to those projections, hold their stock for those projections.”
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